Tip:
Highlight text to annotate it
X
Let's take a look at the global market highlights and news for March 5th 2014.
Russia Recalls Troops - Markets Reverse Course Currencies return to previous prices
Oil and Gold tumble as traders book profits
Let's take a quick look at what is happening in the global markets now.
It looks like the world survived another military crisis after the Russian Defense Minister
recalled troops ordering them to return. President Putin said these were military exercises and
there was no conflict with the Ukraine. He denied that there were any threats or altercations.
In his latest statement he said that "war with the Ukraine would be an extreme step".
The question is was Putin playing chicken or letting the Ukraine and the Crimea know
that they were still under the thumb of Russia? The other question, did the international
press blow the situation out of proportion? Stocks and commodities eased on Tuesday most
returning to their price levels from Friday. While stock markets believe that the U.S.
and Russia will avoid an economy-destabilizing conflict, representatives of both countries
continue to lob threats of sanctions at one another.
The latest came from Sergei Glazyev, an advisor to President Putin, who said on Tuesday that
the Russian government would consider selling its stockpile of U.S. government debt if America
and the EU went forward with threatened trade sanctions, according to the a Russian news
service. Russia's 200 billion dollars in U.S. government
debt is part of its foreign exchange reserves, a fund built up by the Russian government
to help protect it against financial crises, stabilize its own currency, and to enable
banks and other businesses to function during financially stressful times.
In other words, Russian investment in U.S. government debt isn't some kind of noble action
to help their buddies over in North America pay their bills. It's a fund that the Russian
government has built to help its economy function in a world that trades primarily with U.S.
dollars. The Dow Jones industrial average gained 228
points, or 1.4%. It was the biggest gain of the year for the Dow. The S&P 500 rose to
a new all-time high while the NASDAQ gained nearly 1.8%. Investors bailed out of the safe
haven assets as they rushed into Monday. Gold prices fell more than 1%, while the yield
on 10-year U.S. treasury bonds rose to 2.69% from 2.60% late Monday. Bond rates increase
as prices fall. London's benchmark FTSE 100 index ended the
day up 1.72 per cent at 68-23.77 points, Frankfurt's DAX 30 jumped 2.46 per cent to 95-89.15 and
the CAC 40 in Paris climbed 2.45 per cent to 43-95.9.
In the foreign exchange market the US dollar and euro recovered some of Monday's losses
against the yen, the safe haven currency as a degree of confidence returned to the market.
The greenback strengthened to 102.18. The euro edged back up to $1.37-36. The eurozone
producer prices dropped in January at their sharpest annual rate since early 2010, more
than market expectations led by a significant drop in energy prices; this decline has put
pressure back on the ECB ahead of tomorrow's meeting.
Sterling outperformed the dollar and the euro as data continued to support a strong recovery.
Traders will be watching the Bank of England meeting tomorrow.
Moving to the commodities market Gold dropped 1 percent yesterday as equities rebounded
after Russian President Putin ended military exercises. Gold rallied to a four-month high
on Monday after investors trimmed assets perceived as riskier following Russia's military intervention.
Gold fell as much as $13.75 an ounce to $13-36.54. Oil followed suit on Tuesday tumbling on profit-taking
after surging the day before owing to concerns over European energy supplies triggered by
the Ukraine worries. Light, sweet crude settled at $103.33
This is Amy Anderson from OptionRally signing off. Follow me on Facebook and watch for our
new financial terms of the day and our weekly events news. And of course I'm waiting for
your LIKE below if you enjoyed today's Market Watch.